When watching events around the world these days, it is easy to understand the impact of globalization. An elementary example such as Greece shows us how a country of secondary economic importance, and with a modest demographic base despite an ancient cultural history, has been able to plunge the whole of Europe and its 500 million inhabitants into uncertainty

The European crisis, exacerbated by a chronic inability to take decisive action, has in turn hampered the American recovery enough to elicit alarming criticism of European leaders by President Obama. The infighting and internal divisions in Europe could cost him the election this year. Until just a few days ago, the damage was limited to the US and Europe, and China, the world’s new economic MVP, seemed to be carrying on, unaffected and untouchable, in its development. Taking a closer look, however, reveals that things are not as they seem: globalization has struck there, too. April’s statistics show that the infection has suddenly reached the Middle Kingdom.

Exports are down sharply due to the significant drop in demand from Europe and the United States. Growth fell to just 4% in April after sustained double-digits, and the resulting slowdown in industrial activity has caused a decrease in energy consumption, starting with electricity, a more credible economic indicator than GDP statistics. Chinese authorities were forced to revise their economic predictions for the current year, although not by much. Estimating 7% growth, the traditionally cautious Chinese government still managed to predict one percentage point less than the World Bank. In any case, either number is still far less than the double-digits most people were accustomed to. More important to note is that Chinese authorities, predicting that the European and American crises will continue for some time, immediately went into action and rectified some of the most important goals and methods of their national economic policy.

Until recently, the prevailing strategy planned on sustaining the economy through export during the time it would take to build up internal demand, a project with long term goals. The plan was to have dedicated an ever-growing amount of resources to invigorate consumerism and the development of the social state, still weak in China’s peripheral provinces. Faced with April’s numbers, however, and the proven impossibility of weathering the crisis through stimulation of internal demand alone, authorities went back to encouraging investment with the typical rapidity of Chinese decision-making. Banks were immediately allowed to keep lower reserves, and were encouraged to provide more credit to small and medium enterprise and large public companies, while infrastructure projects were accelerated. Once again, investments will make up more than half of Chinese GDP. Greece’s beating wings, swept up by Europe and America, have caused the Chinese Dragon to change its tack as well. Last year it fought inflation that reached 6.5% in July, but now it is concentrating its energy on compensating for the drop of foreign demand due to a worldwide crisis that even Prime Minister Wen Jiabao has said is likely to last a long time.

The only aspect of (little) consolation is the fact that all media, politicians, and Chinese experts are focused on Europe. They talk about Greece and its 10 million inhabitants with more concern than that which the West holds for China, with its 1.3 billion citizens. But the Chinese do ask themselves, amid incredulity and curiosity, what exactly does Europe plan to do in the near future.

Beijing finds it incomprehensible that 25 top-level summits have not been enough to find a solution to the Greek problem. This incomprehension comes at great cost, as China looks more and more towards the Unites States and away from the European Union and the Euro, a currency that China had heavily sustained in the past as a counterweight to the power of the American dollar, a symbol of American global influence.

Globalization has brought its consequences to the entire world with an unprecedented swiftness, but China deserves recognition for the Great Wall they have maintained, with a financial system that is not only protected by deep institutional diversity, but by reserves so extensive as to shelter it from any speculative attack.

One Comment

Bukonat15 June 2012 at 23:46

It couldn’t be true. Let me post EB’s German Language entry here: German lagnaugeIntroductionGerman Deutsch official lagnauge of both Germany and Austria and one of the three official lagnauges of Switzerland. German belongs to the West Germanic group of the Indo-European lagnauge family, along with English, Frisian, and Netherlandic (Dutch, Flemish).The recorded history of Germanic lagnauges begins with their speakers’ first contact with the Romans, in the 1st century BC. At that time and for several centuries thereafter, there was only a single “Germanic” lagnauge, with little more than minor dialect differences. Only after about the 6th century AD can one speak of a “German” (i.e., High German) lagnauge.German is an inflected lagnauge with four cases for nouns, pronouns, and adjectives (nominative, accusative, genitive, dative), three genders (masculine, feminine, neuter), and strong and weak verbs. Altogether German is the native lagnauge of more than 90 million speakers and thus probably ranks sixth in number of native speakers among the lagnauges of the world (after Chinese, English, Hindi-Urdu, Spanish, and Russian). German is widely studied as a foreign lagnauge and is one of the main cultural lagnauges of the Western world.As a written lagnauge German is quite uniform; it differs in Germany, Austria, and Switzerland no more than written English does in the United States and the British Commonwealth. As a spoken lagnauge, however, German exists in many dialects, most of which belong to either the High German or Low German dialectal groups. The main difference between High and Low German is in the sound system, especially in the consonants. High German, the lagnauge of the southern highlands of Germany, is the official written lagnauge. See also Germanic lagnauges.High German (Hochdeutsch).Old High German, a group of dialects for which there was no standard literary lagnauge, was spoken until about 1100 in the highlands of southern Germany. During Middle High German times (after 1100), a standard lagnauge based on the Upper German dialects (Alemannic and Bavarian) in the southernmost part of the German speech area began to arise. Middle High German was the lagnauge of an extensive literature that includes the early 13th-century epic Nibelungenlied.Modern standard High German is descended from the Middle High German dialects and is spoken in the central and southern highlands of Germany, Austria, and Switzerland. It is used as the lagnauge of administration, higher education, literature, and the mass media in the Low German speech area as well. Standard High German is based on, but not identical with, the Middle German dialect used by Martin Luther in his 16th-century translation of the Bible. Within the modern High German speech area, Middle and Upper German dialect groups are differentiated, the latter group including Austro-Bavarian, Alemannic (Swiss German), and High Franconian.Low German (Plattdeutsch, or Niederdeutsch).Low German, with no single modern literary standard, is the spoken lagnauge of the lowlands of northern Germany. It developed from Old Saxon and the Middle Low German speech of the citizens of the Hanseatic League. The lagnauge supplied the Scandinavian lagnauges with many loanwords, but, with the decline of the league, Low German declined as well.Although the numerous Low German dialects are still spoken in the homes of northern Germany and a small amount of literature is written in them, no standard Low German literary or administrative lagnauge exists.Other major dialects.Alemannic dialects, which developed in the southwestern part of the Germanic speech area, differ considerably in sound system and grammar from standard High German. These dialects are spoken in Switzerland, western Austria, Swabia, and Liechtenstein and in the Alsace region of France. Yiddish, the lagnauge of the Ashkenazic Jews (Jews whose ancestors lived in Germany in the European Middle Ages), also developed from High German.As Standard Chinese is, Standard German is also a chosen form of the German lagnauge that exists in different speeches/dialects. One of the few known outright written lagnauges is Sanskrit (dead in the sense that it no longer evolves because no one speak it). I can find one extreme exception, a lagnauge reborn the Hebrew lagnauge.

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About Alberto

Alberto Forchielli, born in 1955, received an MBA with honors from Harvard Business School and a bachelor’s cum laude in Economics from the University of Bologna. He is a founding partner of Mandarin Capital Partners, and the founder and president of Osservatorio Asia, a non-profit research center focused on Asia. He is also the founder of T-Island, a consultancy agency specialized in international relocations for professionals. In addition, he guided the expansion of the Roland Berger Foundation to Italy, which provides individual support for talented students lacking means to further their educations.